In business, the term “portfolio” is used to define a set of common related artifacts (e.g., software applications, hardware systems, facilities, business projects, etc.) that are managed through a calculated balance of business value and business cost. Business modeling provides a mechanism for representing an organization in order to provide predictability as well as scalability for making decisions. Prior art approaches to business modeling represented an organization in terms of a specific dimension and/or property (e.g. its systems, organization structure, or geographic footprint) or in terms of particular themes and key processes (e.g. risk exposure, capital deployed, new product development and deployment). However, the prior approaches did not attempt to analyze the interdependencies between differing aspects (such as people/process/technology) in a common perspective.
In today's enterprise environment, Enterprise Portfolio Management (referred to as EPM) presents a number of difficult challenges. Portfolio management information and control is fragmented in separate, non-integrated management applications and services, such as those that manage people, processes and technology, throughout an enterprise. This lack of integration and access to required information makes it difficult to understand the key relationships and renders effective decision making impossible. Business leadership does not have an effective means of specifying and communicating business strategy to those who manage resources and realize business solutions, thus causing a gap of misalignment between business strategy and realized business solutions. Today's portfolio management decisions do not effectively account for a wide range of competing requirements and constraints. As a result it is very hard to arrive at a reasonable, let alone optimum EPM plan. Multiple users with different roles and responsibilities cannot collaborate and communicate effectively. A common organizing framework or view of the enterprise does not exist among members of the enterprise resulting in miscommunication and inefficiency.
The Enterprise Portfolio Management problem may be stated as “the management of related portfolios of selected assets, so as to accomplish measurable strategic goals of the enterprise.” EPM is a hard problem since it attempts to account for a variety of strategic objectives of the enterprise as portfolio management decisions on related portfolios of assets are determined. An essential requirement to making progress towards solving the EPM problem is the ability to reason, qualitatively as well as quantitatively, about the impact of portfolio trade-off decisions on the strategic objectives of the enterprise. This calls for a unifying representation on which the portfolio management decisions are analyzed and compared in order to understand their collective impact on the enterprise. It is desirable to use the Component Business Model (CBM) to formulate this unifying representation of the enterprise.
Co-pending U.S. patent application Ser. No. 11/176,371, entitled “System and Method for Alignment of an Enterprise to a Component Business Model”, filed on Jul. 8, 2005, the contents of which are herein incorporated by reference, provides a system and method for representing a business with a component business map. The Component Business Model (hereinafter “CBM”) represents a target state of the business, arraying the components by competency and by management level, where each component is a group of cohesive business activities within a competency, and each competency is a non-overlapping partition of the activities of the business. CBM provides a logical and comprehensive view of the enterprise, in terms that cut across commercial enterprises in general and industries in particular.
The CBM as described in the above-referenced patent application is based upon a logical partitioning of business activities into non-overlapping managing concepts, each managing concept being active at the three levels of management accountability, namely providing direction to the business (“direct”), controlling how the business operates (“control”), and executing the operations of the business (“execute”). The term “managing concept” is specially defined as described in the above-referenced foundation patent and is not literally a “managing concept” as that phrase might otherwise be understood in the art.
As taught in the foregoing application, a managing concept is constructed by reference to a specified asset of the business and how that asset may be leveraged for the purposes of the business. A managing concept defines how an instance of an asset is controlled and coordinated within an enterprise. A managing concept is embodied by one or more mechanisms used to do something commercially useful with the asset, such as contain, operate, administrate, or maintain the asset, organize and control the handling of the asset within the enterprise, direct the sourcing, deployment and assessment of the asset, and determine how the asset is defined and operated.
For the purposes of the present invention, as for the related invention, the term “managing concept” is the term associated with the following features of the partitioning methodology. First, the methodology is a partitioning of the whole into necessarily non-overlapping parts. Second, the partitioning process works best when addressed to an asset of the business, where the asset can be further described by attributes. Third, the managing concept must include mechanisms for doing something commercially useful with the asset. For a sensibly defined managing concept, these mechanisms must cover the full range of management accountability levels (i.e., direct, control and execute). Managing concepts are further partitioned into components, which are cohesive groups of activities. The boundaries of a component, which are logical and not physical boundaries, usually fall within a single management accountability level.
In accordance with the teachings of that co-pending, patent application, an enterprise component map is built, representing all businesses and serving as a basis for industry component maps and business component maps. The enterprise component map is partitioned into non-overlapping managing concepts, where each competency is formed of one or more of the managing concepts. Overlays of the current state of the business upon the component map are then used to determine differences between the component map and the current state of the business. The differences can be prioritized for implementing changes to effect alignment of the business to the high priority components of the business map.
Businesses need to transform, almost continuously, as their environments and markets change. Methods, tools and techniques to support business transformation have become increasingly important. This applies to all enterprises, whether in the public sector or the private sector, and applies to for-profit and non-profit businesses alike. Goal-driven business transformation initiatives are often developed and managed in a top-down manner, i.e., they stem from enterprise-wide analyses of business objectives and are assigned to specific organizations and lines of business. In order to manage these initiatives, the business usually considers a collection of strategic options, prioritizes them, and develops investment strategies for deciding which ones need to be funded. In summary, from a top-down perspective, a business needs to manage a set of initiatives that compete for its resources.
At a more operational level, within the business a variety of portfolios need to be managed at varying levels in the enterprise. A portfolio is defined as a formally-established group of related artifacts that are managed by balancing business value and business cost. These could be portfolios of application programs, hardware systems, projects, and many other kinds of assets or resources. The individual portfolios are often developed and managed in a bottom-up manner, i.e. in a localized context with limited consideration of enterprise goals and of other portfolios.
The Component Business Model (CBM) approach decomposes the entire enterprise into discrete business components. The business components are constructed carefully to integrate functional, organizational and technical aspects of the business and a Component Business Map is created for a specific business. The Component Map goes through a process of thorough rationalization and validation to ensure that it truly provides a view of the entire business. A well-constructed Component Map provides an organizing framework for many of the decisions that a business needs to make. The value of CBM is that it provides an organizing management arguments can be projected.
Enterprise Portfolio Management requires effective integration of the cost-value trade-offs that individual portfolio managers, lower down in the enterprise, need to implement. As an example, a business may be pursuing three strategic initiatives, namely to make its processes more efficient, to manage its pool of skilled and expensive professionals, and to reduce the number of software applications that are required to run the business. Somewhere within the business, there are managers who will be responsible for portfolios of processes, people and applications respectively. The CBM components provide the unifying “chunks” of the business that are impacted, to varying extents, by the choices made by the individual portfolio managers. The trade-offs between the different portfolio management decisions can be viewed and analyzed at the level of CBM components that reflect the enterprise view.
It is, therefore, an object of the present invention to provide Enterprise Portfolio Management as an overall top-down business-centric solution to the problem of managing enterprise-wide business transformation through the alignment of business portfolios. The solution ideally utilizes the Component Business Model as a model, technique and tool to manage enterprise portfolios and monitor the progress of strategic initiatives.
It is another object of the invention to provide a method and system to analyze, plan, and control the transformation of a business, interacting with and collecting information from portfolios of applications, systems, projects, and other resources that affect the people, processes and technology that comprise business solutions.
Another object of the invention is to facilitate analysis of business value and realization cost, resulting in a prioritized set of recommendations optimized to the constraints and requirements of the enterprise.
It is another object of the invention to provide a common view of the enterprise based on Component Business Modeling (CBM) as the organizing framework, tailored to the enterprise, for all aspects of portfolio management.
Yet another object of the invention is to realize an Enterprise Portfolio Management Hub and methods for creating and maintaining a portfolio model at the Hub for use in dynamically analyzing business transformation decisions.